Court File and Parties

Court File No.: CV-22-677274 Released: 2023/06/09 Superior Court of Justice - Ontario

Re: Mario Parravano v. St. Paul Fire and Marine Insurance

Before: Associate Justice Graham Heard: June 5, 2023

Appearances: Lenard Kotylo, for the plaintiff (limited scope retainer for this motion) Genevieve Durigon for the defendant (moving party)

Reasons for Decision

(Defendant’s motion for security for costs)

[1] The defendant St. Paul Fire and Marine Insurance (“St. Paul Insurance”) moves for an order requiring the plaintiff to post security for costs of the action. My decision on this motion requires a review of three prior lawsuits involving the same plaintiff and defendant.

[2] The plaintiff Mario Parravano, through various corporations, produced baked goods and cereal bars in Etobicoke, Ontario. On October 15, 1999, they discovered an infestation of Indian meal moth larvae in their product, and some of their cereal bars had to be destroyed. They also allege that because of this infestation, their sales were significantly reduced.

[3] The plaintiff and his corporations submitted claims for property loss and business interruption loss to their insurer St. Paul Insurance. There was no issue that a valid insurance policy was in place (“the Policy”). However, a dispute arose as to the extent of the insurance coverage available, leading to three lawsuits against the insurer. The following description of these three actions is based on the summary contained in the reasons of Hourigan J.A. on the appeal of the trial decision in the second and third of these actions (2019 ONCA 635 at paras 5-10):

1. On September 29, 2000, a group of Mr. Parravano’s corporations (“the Bakemates Group”) commenced an action against St. Paul Insurance (00-CV-198059) claiming indemnity for business interruption and property losses. By order of Spence J. dated October 3, 2000, a receiver was appointed for this group of companies. The receiver ultimately settled this action with St. Paul Insurance and the settlement was approved by the order of Ground J. dated August 6, 2003. This order was upheld by the Court of Appeal on June 9, 2004.
2. On October 13, 2000, Mr. Parravano personally, along with the Bakemates Group and two more of his corporations, commenced a second action against St. Paul Insurance (00-CV-198836). This action included the same claims as the first action. The additional corporate plaintiffs also made claims under the Policy relating to a loss of leasing income which they say the Bakemates Group could not pay owing to their losses, and Mr. Parravano claimed a $950,000.00 bonus that he says that he received from and then loaned to one of the Bakemates companies and which was never repaid.
3. On November 26, 2002, Mr. Parravano and four of his corporations commenced a third action (02-CV-239811) alleging that the receiver who settled the first action with the defendant St. Paul Insurance committed theft of insured equipment and assets by either retaining the items or wrongfully transferring them to a subsequent purchaser, resulting in further business interruption losses for which they claimed indemnity.

[4] The second and third of these actions, being the two actions in which Mr. Parravano himself is a plaintiff, proceeded to a trial on the issue of insurance coverage and the limitation period in November, 2017. In her decision dated April 6, 2018 (2018 ONSC 1365), Akbarali J. dismissed the second action and part of the third action. Both the plaintiffs and St. Paul Insurance appealed the decision. On the appeal, the Court of Appeal upheld the dismissal of the second action and dismissed the third action in its entirety. The plaintiffs, including Mr. Parravano, applied for leave to appeal to the Supreme Court of Canada and this application was dismissed on February 20, 2020.

[5] The dismissal of the two actions and the success of St. Paul Insurance on the appeal resulted in the following costs awards in favour of St. Paul Insurance:

1. On the dismissal of the second action, $179,372 plus interest at 3% from May 24, 2018;
2. On the dismissal of the third action, $75,588 plus interest at 3% from July 3, 2020;
3. On the appeal, $20,000 plus interest at 3% from July 31, 2019.

[6] Mr. Parravano did not pay any of these costs awards and subsequently failed to attend at an examination in aid of execution. St. Paul Insurance then moved for an order to compel Mr. Parravano’s attendance at an examination. On February 12, 2022 Mr. Parravano informed St. Paul Insurance that he would be seeking an adjournment of the motion as he intended to start another action claiming damages against the insurer for bad faith conduct in responding to his claim.

[7] On February 22, 2022, Mr. Parravano issued the statement of claim in this action, alleging the following:

• In 1999, his companies were thriving and profitable, with national sales of approximately $25 million;
• On or about October 23, 1999, he received a quality complaint from Costco concerning an ingredient in one of its products. After consulting a St. Paul Insurance agent, he initiated a recall of the product, which seriously impacted his businesses’ operations, including their relationship with their lending bank;
• At the end of November, 1999, an adjuster with St. Paul Insurance “inspected recalled product with the help of an entomologist” and approved the Claim as valid. (emphasis added) [Although the statement of claim in this action does not identify the Indian meal moth larvae infestation referred to in the three earlier actions, the fact that an entomologist was involved in November, 1999 clearly indicates that the plaintiff is referring to the same event.]
• Despite the recommendations of the plaintiff’s auditors, the defendant stalled “further payments, negotiations, and action”;
• With no further payments made on the insurance claim, “and a complete lack of cooperation from the insurance company . . . the BakeMates companies were consequently placed into Receivership on October 3, 2000”;
• “It took approximately 2 more years for the Defendant to settle and pay the Claim, valued by [the plaintiff’s] Auditors at $15.5 million, for only $2.2 million (which was negotiated by the Receiver so the Parravanos wouldn’t get any funds.”
• “The ongoing stall tactics, delays, lack of communication and negotiations, and willful abandonment of the Claim by the Defendant constitute extreme bad faith with malicious intent. In fact the Defendant stalled paying the claim hoping that the Plaintiff and corps [sic] would go away after the bankruptcy and not pursue the claim”;
• “During the entire 20+ year litigation, the Plaintiff’s lawyers failed to advise that a bad-faith claim against the Defendant was possible and should be filed. It was only recently that the Plaintiff learned of “bad-faith” claims”;
• The plaintiff claims $30 million for the loss of personal equity in his businesses and $30 million in punitive damages.

[8] The defendant’s motion to compel Mr. Parravano’s attendance at an examination in aid of execution in the two actions in which costs were awarded against him was heard by Associate Justice Brott on March 10, 2022. On that occasion, Mr. Parravano requested an adjournment of the motion so that he could pursue the bad faith claim against St. Paul Marine in this action.

[9] In her endorsement of March 10, 2022, Associate Justice Brott refused the adjournment request, stating:

The new action which appears on its face to be a relitigation of the issues in the two within actions but with a spin of bad faith will in no way alter the determinations made by Justice Akbarali and the Court of Appeal in these actions. The costs awards are due and owing now. All avenues of appeal of the two within actions have been exhausted. The time has arrived for the payment of the judgement/costs.

[10] AJ Brott ordered Mr. Parravano to attend an examination in aid of execution and to produce various documents. She also ordered that he pay costs of the aborted examination and of the motion in the total amount of $3,074.

[11] To date, Mr. Parravano has paid none of the costs awarded against him of the trials, appeal, and motion before AJ Brott in actions nos. 00-CV-198836 and 02-CV-239811. With post-judgment interest, those costs now exceed $310,000.

Applicable Rule and Case Law

[12] The defendant now moves for security for costs under sub-rules 56.01(1)(c) and (e) of the Rules of Civil Procedure:

56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that, . . .

(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part; . . .

(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; . . .

[13] Counsel agree that the application of rule 56.01(1) is guided by the decision in Coastline Corporation Ltd. v. Canaccord Capital Corporation et al., 2009 ONSC 21758. In para. 7 of that decision, Master Glustein (as he then was) summarized previous case law:

• The initial onus is on the defendant to satisfy the court that it “appears” there is good reason to believe that the matter comes within one of the circumstances enumerated in Rule 56.01 (Hallum v. Canadian Memorial Chiropractic College (1989), 1989 ONSC 4354, 70 O.R.(2d) 119 (H.C.J.) at 123);
• Once the first part of the test is satisfied, “the onus is on the plaintiff to establish that an order for security would be unjust” (Uribe v. Sanchez (2006), 33 C.P.C.(6th) 94 at para. 4);
• The second stage of the test “is clearly permissive and requires the exercise of discretion which can take into account a multitude of factors”. The court exercises a broad discretion in making an order that is just (Chachula v. Baillie (2004), 2004 ONSC 27934, 69 O.R.(3d) 175 (S.C.J.) at para. 12);
• The plaintiff can rebut the onus by either demonstrating that: (a) the plaintiff has appropriate or sufficient assets in Ontario or in a reciprocating jurisdiction to satisfy any order of costs made in the litigation, (b) the plaintiff is impecunious and that justice demands that the plaintiff be permitted to continue with the action, i.e. an impecunious plaintiff will generally avoid paying security for costs if the plaintiff can establish that the claim is not “plainly devoid of merit”, or (c) if the plaintiff cannot establish that it is impecunious, but the plaintiff does not have sufficient assets to meet a costs order, the plaintiff must meet a high threshold to satisfy the court of its chances of success (See Willets v. Colalillo, [2007] O.J. No. 4623 (S.C.J. – Mast.) at paras. 46, 47, and 55; Uribe, at para. 5; Zeitoun v. Economical Insurance Group (2008), 2008 ONSC 20996, 91 O.R. (3d) 131 (Div. Ct.) at para. 50; Bruno Appliance and Furniture Inc. v. Cassels Brock & Blackwell LLP, [2007] O.J. No. 4096 (S.C.J. – Mast.) (“Bruno”) at para. 35);
• Merits have a role in any application under Rule 56.01, but in a continuum with Rule 56.01(1)(a) at the low end (Padnos v. Luminart Inc., 1996 ONSC 11781, [1996] O.J. No. 4549 (Gen. Div.) (“Padnos”), at para. 4; Bruno, at para. 36);
• The court on a security for costs motion is not required to embark on an analysis such as in a motion for summary judgment. The analysis is primarily on the pleadings with recourse to evidence filed on the motion, and in appropriate cases, to selective references to excerpts of the examination for discovery where it is available (Padnos, at para. 7; Bruno, at para. 37);
• “If the case is complex or turns on credibility, it is generally not appropriate to make an assessment of the merits at the interlocutory stage. The assessment of the merits should be decisive only where (a) the merits may be properly assessed on an interlocutory application; and (b) success or failure appears obvious” (Wall v. Horn Abbott Ltd., 1999 NSCA 7240, [1999] N.S.J. No. 124 (C.A.) at para. 83);
• The evidentiary threshold for impecuniosity is high, and “bald statements unsupported by detail” are not sufficient. The threshold can only be reached by “tendering complete and accurate disclosure of the plaintiff’s income, assets, expenses, liabilities and borrowing ability, with full supporting documentation for each category where available or an explanation where not available” (Uribe, at para. 12; Shuter v. Toronto Dominion Bank, 2007 ONSC 37475, [2007] O.J. No. 3435 (S.C.J. – Mast.) (Shuter) at para. 76);
• When an action is in its early stages, an installment (also known as “pay-as-you-go”) order for security for costs is usually the most appropriate (Bruno, at para. 65; Hawaiian Airlines Inc. v. Chartermasters Inc., et al. (1985), 1985 ONSC 2155, 50 O.R.(2d) 575 (S.C.O. – Mast.)

(As indicated below, Mr. Parravano acknowledges that his evidence does not demonstrate that he is impecunious so I have omitted from this review of the law the requirements upon a plaintiff who raises impecuniosity as a defence to a security for costs motion.)

[14] Both counsel also rely on Yaiguaje v. Chevron Corp., 2017 ONCA 827, in which the Court of Appeal confirmed the approach to be taken in determining whether a security for costs order is warranted (at paras. 24 and 25):

24 Courts in Ontario have attempted to articulate the factors to be considered in determining the justness of security for costs orders. They have identified such factors as the merits of the claim, delay in bringing the motion, the impact of actionable conduct by the defendants on the available assets of the plaintiffs, access to justice concerns and the public importance of litigation. [citations omitted]

25 . . . [E]ach case must be considered on its own facts. It is neither helpful nor just to compose a static list of factors to be used in all cases in determining the justness of a security for costs order. There is no utility in imposing rigid criteria on top of criteria already provided for in the Rules. The correct approach is for the court to consider the justness of the order holistically, examining all the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made.

[15] Part of the basis for the defendant’s motion is its contention that the plaintiff’s action is frivolous and vexatious (Rule 56.01(1)(e)). The characteristics of a vexatious lawsuit were described by Henry J. in Re: Lang Michener and Fabian (1987), 1987 ONSC 172, 59 O.R. (2d) 353 (at pp. 8-9):

(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;

(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious; [emphasis added]

(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings; [emphasis added]

(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action; [emphasis added]

(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious; [emphasis added]

(g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.

Analysis and Decision

[16] Based on Coastline Corporation, supra, the first issue is whether the defendant has established that it appears there is good reason to believe that the matter comes within one of the circumstances enumerated in Rule 56.01(1). Mr. Parravano acknowledges that he has not paid the costs awards, now exceeding $310,000.00, in actions 00-CV-198836 and 02-CV-239811. In both of these actions, Mr. Parravano was one of the plaintiffs and St. Paul Insurance was the defendant. The defendant has therefore met its onus to establish that this action falls within Rule 56.01(1)(c).

[17] Under Rule 56.01(1)(e), the defendant must establish that “there is good reason to believe that the action is frivolous and vexatious and that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant.”

[18] The various considerations in determining whether an action is frivolous and vexatious are as set out in Re: Lang Michener and Fabian, supra, and I have highlighted the criteria that are applicable to this case. Most significantly on this motion, an action is vexatious where it is obvious that it cannot succeed.

[19] Mr. Parravano claims damages for bad faith based on the conduct of the defendant St. Paul Insurance in relation to the contract of insurance. However, the insurer successfully defended two previous actions under the same contract on the basis that there was either no insurance coverage or that Mr. Parravano failed to sue within the applicable limitation period. Where the defendant’s denials of the plaintiff’s previous claims have been determined by the Court of Appeal to have been meritorious, those denials cannot then be found to have been made in bad faith. I accept that on this basis alone, Mr. Parravano’s action cannot succeed and it is therefore frivolous and vexatious.

[20] The defendant also submits that Mr. Parravano’s action is frivolous and vexatious because it was commenced following the expiry of both the two year limitation period and the “ultimate limitation period” of 15 years contained respectively in s. 4 and s. 15(2) of the Limitations Act, 2002, S.O. 2002, c. 24, as set out below.

[21] Mr. Parravano alleges bad faith based on the defendant’s handling of his insurance claims from when the Indian meal moth larvae infestation was discovered until it settled the claims approximately two years after the BakeMates companies were placed into receivership on October 3, 2000. Specifically, Mr. Parravano pleads that “The ongoing stall tactics, delays, lack of communication and negotiations, and willful abandonment of the Claim by the Defendant constitute extreme bad faith with malicious intent.” Although on a reading of the statement of claim, the defendant’s bad faith conduct occurred between when the infestation was discovered in October, 1999 and October, 2002, counsel submits that the bad faith continued into 2003.

[22] This action was commenced on February 22, 2022, at least 18 years after the most recently alleged bad faith conduct by St. Paul Insurance. In paras. 16-22 of his responding affidavit, Mr. Parravano deposes:

• that he did not learn of the possibility of an action against the defendant based on bad faith until a paralegal stated to him in the early part of 2022 that “it appeared that the insurance company Defendant had acted in “bad faith” in its dealings with him;
• that the issue of bad faith had not been previously raised during the past litigation so a lawsuit against St. Paul Insurance for acting in bad faith was not a relitigation of previous matters;
• that the bad faith principle had not been described to him by the legal representatives who had acted on the prior cases.

[23] Based on this evidence, Mr. Parravano submits that his claim based in bad faith against St. Paul Insurance was not discovered until 2022, presumably shortly before this action was commenced on February 22, 2022, so it is not statute-barred. He relies on the following sections of the Limitations Act, 2002, S.O. 2002, c. 24:

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

5(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made; and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[24] Mr. Parravano submits that his action against the defendant was commenced within the two year limitation period in s. 4 of the Limitations Act, 2002 because, applying s. 5(1)(a)(iv), he did not know that he could bring a proceeding for a remedy for the defendant’s bad faith conduct until he was informed of that possibility by a paralegal in early 2022. The present action concerns the relationship between the plaintiff and his companies as insureds on one hand and the defendant insurer on the other. The allegedly bad faith conduct of the insurer was not an issue in the previous actions. Further, Mr. Parravano was relying on his lawyers’ advice in advancing his previous claims and his evidence is that those lawyers never raised the possibility of an action against the insurer based on its bad faith conduct.

[25] The defendant submits that the facts on which Mr. Parravano relies to support his bad faith claim in this action were known to Mr. Parravano before the commencement of his third lawsuit on November 26, 2002, and that cause of action was therefore discoverable before the commencement of that lawsuit. Further, Mr. Paravanno was represented by more than 10 different lawyers in his previous actions and an adverse inference can be drawn from their failure to advance a bad faith claim in those actions.

[26] Mr. Parravano does not dispute that the facts alleged in his current action regarding the defendant insurer’s handling of his claims were all known to him by 2003 at the latest. His position is that his claim for damages based on the defendant insurer’s bad faith conduct was not discovered until a paralegal informed him of the possible claim in 2022.

[27] Mr. Parravano had counsel since no later than September 29, 2000 when he commenced his first action against St. Paul Insurance. The knowledge of his lawyers is imputed to him and he is bound by their conduct. These circumstances are addressed by s. 5(1) of the Limitations Act, 2002 which states that a claim is discovered on the earlier of the day determined under s. 5(1)(a) and “(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).” Mr. Parravano’s circumstances commencing in 2000 were that he had counsel representing him with respect to his insurance claims. In those circumstances, he ought to have known that he had sustained a loss arising from bad faith conduct by St. Paul Marine (s. 5(1)(a)(i–iii) and that “a proceeding would be an appropriate means to seek to remedy it” (s. 5(1)(a)(iv)).

[28] I therefore conclude that the bad faith claim now asserted by Mr. Parravano against St. Paul Insurance was discoverable in 2003 at the latest and it is therefore obvious that the current action commenced in 2022 cannot succeed owing to the expiry of the two year limitation period.

[29] Even if one were to accept that Mr. Parravano’s claim against St. Paul Insurance based on alleged bad faith was not discoverable until he spoke with a paralegal in 2022, his action would still be barred by the “ultimate limitation period” of 15 years in s. 15 of the Limitations Act, 2002. The subsections of s. 15 relevant to this motion are:

15 (1) Even if the limitation period established by any other section of this Act in respect of a claim has not expired, no proceeding shall be commenced in respect of the claim after the expiry of a limitation period established by this section.

(2) No proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place. . . .

(4) The [15 year] limitation period established by subsection (2) does not run during any time in which, . . .

(c) the person against whom the claim is made,

(i) wilfully conceals from the person with the claim the fact that injury, loss or damage has occurred, that it was caused by or contributed to by an act or omission or that the act or omission was that of the person against whom the claim is made, or

(ii) wilfully misleads the person with the claim as to the appropriateness of a proceeding as a means of remedying the injury, loss or damage.

(5) The burden of proving that subsection (4) applies is on the person with the claim.

[30] Section 15(2) of the Act establishes an ultimate limitation period of 15 years following “the day on which the act or omission on which the claim is based took place.” Under s. 15(1), this 15 year limitation period applies “even if the limitation period established by any other section of this Act in respect of a claim has not expired”, i.e. even accepting that under s. 5(1) of the Act, the two year limitation period did not begin to run until 2022. Accepting that Mr. Parravano’s claim is based on acts of bad faith that occurred between 1999 and 2003, the 15 year ultimate limitation period would have expired no later than December 31, 2018, more than three years before the action was commenced.

[31] Mr. Parravano relies on the Limitations Act, 2002, s. 15(4)(c) to argue that the 15 year limitation period in s. 15(2) did not run while St. Paul Insurance wilfully concealed its bad faith from him and/or wilfully misled him. He submits both that the defendant’s alleged bad faith in itself constituted wilful concealment of the bad faith conduct, and that the insurer wilfully misled him as to the appropriateness of a proceeding as a means of remedying the damage.

[32] There is no merit to either of these submissions. Mr. Parravano was aware of the defendant insurer’s handling of the claim from the outset and had counsel representing him and his companies throughout, from at least as early as September 29, 2000, when he commenced the first action referred to above, through the trial held in November, 2017, and the appeal heard on June 27, 2019. Even if one accepts the possibility of bad faith conduct by the insurer, there is no evidence that it concealed any such conduct.

[33] More importantly, the plaintiff, either personally or through his lawyers, was aware of the manner in which the insurer was handling the claim throughout. Based on his own pleading in this action, Mr. Paravanno was aware of loss or damage so there could have been no concealment of any such “injury loss or damage.” Similarly, he simply makes a bald allegation that the defendant insurer wilfully misled him as to the appropriateness of a proceeding to remedy his loss but has provided no evidence to support that allegation.

[34] Under s. 15(5) of the Limitations Act, “The burden of proving that subsection (4) applies is on the person with the claim.” Mr. Parravano has failed to meet this burden, so there is no basis on which to grant him any relief from the ultimate limitation period in s. 15(2) under s. 15(4)(c) based on any possible concealment or misleading conduct. The plaintiff’s claim is therefore barred by the “ultimate limitation period” of 15 years.

[35] Both because the plaintiff cannot recover damages from the defendant insurer for bad faith where his claims under the policy were dismissed, and because the action was started beyond the expiry of the two year limitation period or at least the ultimate limitation period of 15 years, I am satisfied that, applying the criteria in Re: Lang Michener and Fabian, it is obvious that the plaintiff’s action cannot succeed and it is therefore frivolous and vexatious.

[36] My conclusion in this regard is also based on other characteristics of a vexatious action enumerated in Lang Michener (see para. [15] above), including the fact that Mr. Parravano has rolled forward grounds and issues from his earlier actions into this current action (item d), the whole history of the matter including Mr. Parravano’s two unsuccessful actions (item e), and his failure to pay the costs awards in those actions (item f).

[37] Continuing to apply rule 56.01(1)(e), I must now determine whether there is also good reason to believe that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant.

[38] As stated above, the plaintiff has failed to pay over $310,000.00 in outstanding costs awards from the previous actions, which have been outstanding for over three years since February 20, 2020 when the Supreme Court of Canada dismissed his application for leave to appeal. He also failed to attend an examination in aid of execution with respect to the outstanding judgment debt until ordered to do so by Associate Justice Brott on March 10, 2022. The plaintiff’s failure to pay these outstanding costs awards and his resistance to the defendant’s efforts to obtain disclosure of his income and assets constitute good reason to believe that he has insufficient assets to pay any costs that might be awarded in this action.

[39] The defendant having established that it appears there is good reason to believe that the matter comes within the circumstances in Rule 56.01(1)(c) and (e), I will proceed to the second stage of the analysis to determine whether the plaintiff can establish that an order for security for costs would be unjust.

[40] Although in Coastline Capital, the court stated that a plaintiff’s impecuniosity can be a basis for a court’s refusal to order security for costs, Mr. Parravano’s counsel acknowledges that there is not sufficient evidence on this motion to establish that he is impecunious. However, counsel relies on the decision of Master Jolley (now titled Associate Justice Jolley) in Mazzika Arbika Lounge Ltd. v. Aviva Insurance, 2017 ONSC 6801 (paras. 21-27) to argue that an order for security for costs would be unjust because it was the conduct of St. Paul Insurance that has prevented Mr. Parravano from paying the outstanding costs and is also preventing him from posting security.

[41] I accept that based on Mazzika Arbika Lounge Ltd., the conduct of a defendant resulting in a plaintiff’s ability to post security can be the basis of a court’s decision that an order for security for costs would be unjust. However, in that case, Master Jolley exercised her discretion to decline to order security for costs because the plaintiff’s materials “suggest that it has a good chance of success at trial” (para. 26) and “in light of the allegation that [the plaintiff] is in the financial situation it is because of the defendants’ failure to pay what is owing under the insurance policy” (para. 27). In the case before me, I have concluded that it is obvious that Mr. Parravano’s action cannot succeed and there is no basis to conclude that his financial circumstances were caused by the defendant insurer.

[42] Mr. Parravano’s counsel also submits that the disparity in the parties’ financial resources is a further reason that an order for security for costs would be unjust and relies on Reset Electronics et al. v. Hydro One Networks et al., 2016 ONSC 921 (at para. 28):

28 . . . Hydro One [the defendant] is a major corporation with considerable resources and in-house counsel. Reset [the plaintiff] on the other hand is an impecunious corporation in receivership whose sole shareholder is a discharged bankrupt, allegedly as a result of the actions and representations of Hydro One. Reset’s case has merit and its sole shareholder would benefit directly from a positive outcome in the action . . . . If an order for security for costs is made, I am of the view that it would effectively end the litigation. In all of the circumstances I am of the view that it would be unjust to order security for costs. . . .

[43] This decision is based in part on an allegation that the plaintiff’s financial position was compromised by the defendant’s conduct that is the subject of the litigation. Once again, in Mr. Parravano’s case, the two previous lawsuits were ultimately dismissed and I have concluded that it is obvious that the current action cannot succeed. Further, in his evidence in response to the motion, Mr. Parravano alleges only that he cannot pay the previous cost orders because the actions of the defendant caused him economic loss. He provides no detailed information with respect to his financial resources and does not demonstrate that an order for security for costs would prevent him from proceeding with this action. These circumstances are therefore clearly distinguishable from those in Reset Electronics.

[44] Mr. Parravano is a plaintiff in various other ongoing lawsuits and he argues that recovery of funds in one or more of these lawsuits would enable him to pay costs in this action such that an order for security for costs is unnecessary. However, the plaintiff’s possible financial recovery in these lawsuits is speculative and is no basis to refuse an order for security for costs. Further, the plaintiff could also be unsuccessful in one or more of those lawsuits and thus become responsible for paying even more costs.

[45] As concluded above, the defendant has established that this case falls within the circumstances in Rule 56.01(1)(c) and (e), and the plaintiff has not demonstrated that an order for security for costs would be unjust. Further, considering the case holistically, as mandated by the Court of Appeal in para. 25 of Yaiguaje, supra, Mr. Parravano has unsuccessfully brought two actions against the defendant St. Paul Insurance in which he has failed to pay the costs awarded against him. He now brings a further action against the same defendant arising from the same circumstances as the previous actions.

[46] The purpose of Rule 56.01(1)(c) is to protect a defendant’s ability to recover costs from a party that has failed to comply with previous court orders to pay their costs. Looking at the “big picture”, it would be unjust to allow Mr. Parravano a free ride with respect to the costs of his current action where he has failed to pay the costs of his previous actions, especially where his current action is of such dubious merit. I conclude that Mr. Parravano shall post security for the defendant’s costs in this action.

[47] St. Paul Insurance has filed a draft bill of costs reflecting anticipated costs of defending the action of approximately $268,488.00 inclusive of disbursements of $45,000.00 and HST of $30,888.00. The total amount of security sought is similar to the total of approximately $255,000.00 awarded to the defendant in the second and third actions, not including the costs of the appeal. Defendant’s counsel advised at the hearing that the documents from the first three actions now occupy an entire room at her firm’s offices, although this information is not found in the supporting evidence.

[48] Mr. Parravano’s counsel submits that the total costs in the defendant’s bill of costs are excessive and referred specifically to the 135 hours estimated to prepare for and attend examinations for discovery. He also submits that any order for security should require payment in stages, over the course of the lawsuit, which I agree with.

[49] Although the costs awarded in the previous actions are a reasonable yardstick for the likely costs of defending this action, those costs were in respect of two actions which were ultimately tried together so the costs of a single action are plausibly less. However, the proposed costs also include the costs of a summary judgment, rule 21 or vexatious litigation motion which would not have been part of the earlier actions. The bill of costs also includes $45,000.00 for disbursements including experts’ fees but there is no evidence as to what experts might be required or the likely cost of their reports.

[50] A reasonable estimate of the defendant’s defence costs is $220,000.00 based on $190,000.00 for fees and HST and $30,000.00 for disbursements. The plaintiff shall post security for costs totalling $220,000.00 in the following installments:

1. $60,000.00 within 60 days of the date of this order;
2. $60,000.00 within 60 days of the completion of the first examinations for discovery of both parties, not including any re-attendance;
3. $100,00.00 within 60 days of the commencement of mandatory mediation.

[51] Defendant’s counsel also sought an order allowing them to move ex parte in the event of a failure to comply with the security for costs order. I decline to do so as the plaintiff should not be deprived of the opportunity to provide an explanation for any default.

Costs of the Motion

[52] Defendant’s counsel seeks partial indemnity costs of $8,719.86. Mr. Parravano is now claiming $60 Million in a complex action and the motion materials required a review of a long history of litigation. Further, the hearing of the motion was adjourned from February 23, 2023 which increased the defendant’s costs by requiring a further attendance with additional preparation.

[53] The plaintiff has no costs outline and counsel submits that if he were successful, he should recover partial indemnity costs of $2,500.00. With respect to the costs sought by the defendant, plaintiff’s counsel submits that the defendant should not have opposed the adjournment request on February 23, 2023.

[54] In reply, defendant’s counsel submitted, and I agree, that the issue on the February 23, 2023 adjournment request was primarily whether the motion should be adjourned to as late as August, 2023 but counsel did not oppose an adjournment in principle. Further, counsel submits that plaintiff’s counsel’s proposed partial indemnity costs of $2,500.00 for preparation for and attendance at the motion is consistent with the defendant’s proposed costs figure, taking into account the materials reviewed and prepared by defendant’s counsel and the fact that she prepared for two attendances.

[55] I note that the partial indemnity hourly rates of both defendant’s counsel ($156/hr for Ms. Durigon (2010 call) and $234/hr for Mr. Tompkins (1980 call) are modest given their years at the Bar. I conclude that the defendant’s proposed costs are reasonable for preparation of an extensive motion record and a factum and preparing for and attending at the two scheduled hearings. The plaintiff shall pay the costs of the motion fixed at $8,719.86 payable within 60 days.

Associate Justice Graham Date: June 9, 2023